Yesterday: No Problem; What about today? (PMI, loan officer, interest rate, credit)

[drjones96]

OK here's my situation.
The past:
5 years ago I purchased my first home. I put 3% down with an FHA loan. My credit was spotless at 750+. I borrowed ~$130k. And the payments are well within my means of income of approximately $55k/yr.

The Present:
I am selling my home and need to buy another one. I have taken a detour with my career. I have changed jobs and have to move. My income is higher at approximately $75k/yr. My new employer has given me a relocation lump sum of $25k ($15.5k after taxes). I have another $6k coming in severance from my previous job. Plus another $2k in savings. Total $23k cash. In order to get out of my current home I'm going to have to sell it cheap....and likely have to cut a check for the balance still owed on my mortgage. Hopefully this doesn't cut too deep into my pile of money because I think I'm going to need every bit of it possible to get my next home.

So that's my worry. I can go out with my $23k and buy a home no problem. But I know for a fact that that money isn't all going to be there when all is said and done. I've got to go live in an appartment (more $$) temporarily while my home sits on the market. I've got to make trips back and forth to see my family (more $$$). Random crazy expenses like storage for excess stuff and paying for a cleaning lady to make sure my house stays spotless for potential buyers (more $$$$$). Moving expenses (more $$$) When All is said and done I may only have $12K left over. I may be able to get some money from our folks but I'm not banking on it.

My family has grown over the past 5 years and I need a larger more expensive home. My debt has also grown with my family. My credit is still 750+ but I worry that a lender will look at my debt-to-income ratio and turn me down for a loan. I'm looking at homes in the neighborhood of $185k.

Do any financial savvy folks out there think there will be a problem lending me the money with a 3% down payment like I did before? In today's lending environment?

How much money do I need to bring to closing to cover 3% down plus closing costs on a $185k home? Is $12k going to be enough???? If not I need to see if I can squeeze some sellers into getting me some more cash to close with.

I think with my first home I put up 3% and then had to bring $5000 to closing.

[vukinjo]

Depending on where you are moving to, you may want to look at Bank of America's No Fee Mortgage Plus. It requires only 5% down, no PMI and no closing costs (may require 1 point or have a higher rate). They waive their lender fees and pay all third party fees (title company, attorney, etc).

[drjones96]

It just so happens that I am a BoA guy. I have several accounts with them. 2 checking, 1 savings and 1 Credit account.

I worry about the higher rate though. That translates to a higher payment. How high of a rate are we talking? I need to keep my monthly payments on the low.

3% on $185k = $5550 + $5000 closing costs?????? = $10000

5% on $185k = $9250 + $0 closing costs = $9250

Comes out about the same in terms of money I'd need to come up with assuming my closing costs are going to be $5000 in the first FHA loan case.

But the "No PMI" is a good thing....hmmmm

I'm interested in knowing what kind of diff the payments would be.

[Bette]

FHA will go to 97.75% and depending where you are buying, there still may be 100% financing (one loan). Otherwise, it will be 95% - doing it this way, you would have PMI.

What state are you in? I am a mortgage broker in Florida but there are many good mortgage brokers on this site.

[drjones96]

I am in Fort Worth, Texas now and moving to Wichita, KS.

[drjones96]

Originally Posted by vukinjo

....may require 1 point...

What is a point? What does that mean?

[vukinjo]

A "discount" point is 1% of the mortgage amount which is used to buydown the interest rate. If you look on their website, they'll quote today's rate with around 1 point (may be a little more or a little less) but then you can also compare the rates with no points as well. Also, I would recommend applying online or calling the 800#. If you go through a retail loan officer, they can quote a little higher rate or points.

[drjones96]

I just got pre-qualed!

[vukinjo]

Great! This really is a great program if you can't swing 20% for a downpayment. The idea of paying PMI just irritates me and on top of that, no closing costs. So for me, this was perfect. This program also works with other programs besides a 30yr fixed. I shopped several lenders and even brokers and none could offer close to this.

[drjones96]

Well I was checking out the details of the closing costs. There are actually closing costs you have to pay but BoA picks up the tab for about half of it. Normally it would be $7700 on a $200K home but with this plan it knocks it down to about $4200. And then you have to come up with 5% down so that adds up to about $14200 due at closing. I can probably swing that. And if I could get some help from the sellers with the closing costs I could definitly do it.